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Not a panacea

By John Conway
May 26, 2011

A recent article in another newspaper asks “(c)an safe fracking jump start Sullivan County’s economy?” and seems to answer with a resounding, “yes.”

Unfortunately, the article is rife with misinformation, beginning with the comment that the United States is dependent upon the oil we get from people “who hate us and would like to destroy our way of life.” This is fear mongering at its worst. The U.S. produces most of its own oil, in fact, enough to be consistently ranked number two or three in the world behind Saudi Arabia and, more recently, Russia. Moreover, the majority of the oil we import comes from Canada and Mexico, and as recently as 2009, we imported nearly as much oil from Canada and Mexico as from all other countries combined. The premise that we are dependent upon those who hate us (presumably the Arab world and Venezuela) is inaccurate.

More disturbing is the contention that horizontal gas drilling is an economic panacea for the region. Studies show this is simply untrue. Most regions in which horizontal gas drilling has occurred have found the economic benefit an elusive chimera that never actually materializes. In fact, as much as 80% of the economic spin-offs of the drilling accrue to entities that are out of the region in which the drilling takes place. Since New York State has no severance tax, taxing the gas as it leaves the well, there is even less economic benefit to realize here.

True, those involved with the drilling process will spend money in motels, gas stations and restaurants, providing a well-deserved and much-needed boon for those businesses, and some sales and occupancy tax for county government; but that is basically the extent of the economic benefits. There are generally few local jobs generated by drilling. Drill rigs, support equipment and supplies are typically purchased out of the state, so there is minimal sales tax generated for the region. Property tax revenue, if affected at all, will likely be diminished, since the market value of land adjacent to drill sites will decrease. Most importantly, potential clean-up costs, repairs to damaged roads and infrastructure and the risk of devastation to the environment will likely dwarf any economic benefits realized from the drilling.